January 27, 2011
Please direct this to Martha Haines.
For units of local government that have a significant exposure to general obligation capital appreciation bonded debt, and a material amount of accrued interest expense, shouldn't the industry be recognizing the accured interest expense as direct debt?
I realise that under State of Ill law, accrued interest expense doesn't affect the limited debt margin. However, I don't see why that matters.
Alternate Revenue Source Bonds don't affect the debt margin either, yet they are typically included as direct debt.
Please let me know what you think.